94 Minimum period of ownership

Summary

This section provides that in order to qualify for business relief, relevant business property must have been owned by the disponer, or his/her spouse, for a minimum period prior to the gift or inheritance. In the case of an inheritance taken on the death of the disponer, that minimum period is 2 years. In the case of a gift made during the lifetime of the disponer, it is 5 years. Gifts and inheritances out of a trust will qualify for relief if the property was in the trust (or in the ownership of the disponer or his/her spouse/civil partner) for the previous 5 years.

Details

Property will not be relevant business property unless it was comprised in the disposition continuously:

• for a period of 2 years immediately prior to the date of the inheritance where an inheritance is taken on the date of death of the disponer, and
• for a period of 5 years immediately prior to the date of the gift or inheritance in any other case.

The disposition in question will generally be the will or intestacy of the disponer and if the disponer or his or her spouse has owned the property concerned for the 2 years prior to the date of death, it will be deemed to have been comprised in the disposition for that period and to qualify accordingly.

In the case of a straightforward gift during the disponer’s lifetime, the disposition will be the gift and that gift will qualify for relief if the property comprised in the gift was owned by the disponer or his/her spouse for 5 years prior to the gift.

Gifts or inheritances out of a settlement will qualify for relief if the property has been owned by the trustees of the settlement for 5 years prior to the gift or inheritance (or 2 years in the case of an inheritance taken on the death of the disponer). Again, periods of ownership of the disponer, or his/her spouse/civil partner, immediately prior to the settlement will count for the purposes of the 5 year or 2 year rule.

Relevant Date: Finance Act 2015